Ethereum co-founder Vitalik Buterin has signaled a fundamental shift in the blockchain roadmap that effectively declares the era of the “branded shard” to be over.
On February 3, Buterin argued that the industry’s previous “stacking-centric” view no longer made sense, citing faster scaling on Ethereum’s core layer and slow decentralization among top stacks.
This philosophical correction lands directly on the Coinbase-backed Base network.
Over the past few years, the Ethereum Layer 2 solution has become one of the largest consumer-facing deployments in the crypto ecosystem, with over $11 billion in total value secured (TVS).
However, Buterin’s new position on the roadmap calls into question the validity of Layer 2s that rely on company affiliation rather than unique technical utility.
As a result, this puts significant pressure on Base. This raises the question of whether Ethereum’s evolving definition of “aligned scaling” erodes the long-term economic benefit of the Coinbase-backed Layer 2 solution, particularly the lucrative revenue model related to centralized sequencing.
A massive revenue driver
Indeed, Base has been a financial revelation since its launch in August 2023.
CryptoSlate previously reported that the network generated more than $75 million in revenue in 2025. This figure represented almost 60% of the entire Layer 2 sector’s revenue that year.
Market observers have noted that the disparity between its revenues and operating costs is the defining characteristic of its current business model.
Notably, L2BEAT data indicates that Base paid Ethereum approximately $1.52 million over the past year to publish transaction data and cover settlement overheads. This averages out to about $4,180 per day, or about $0.000406 per user transaction.
In exchange for this relatively low rent paid to the mainnet, Base captures significant value. Recent 24-hour metrics indicate that the network processed approximately 12 million transactions and hosted approximately 409,453 active addresses.
For Coinbase, it’s not just an experiment. It is a high-margin diversifier that monetizes on-chain activity even when spot trading volumes are cyclical.
The dilemma of corporate control
Buterin’s criticism targets the gap between the deployment ideal and the reality of the Base’s current operations.
He argued that many Layer 2s still operate as separate chains with bridges rather than true extensions of Ethereum. This is largely because they rely on multisig (multi-signature) wallets, security advisories, and centralized operators for upgrades.
In light of this, Buterin’s “new path” involves three practical filters for chains: incentivizing them to do more than just scale, maintaining at least Tier 1 maturity when managing Ethereum assets, and prioritizing interoperability.
Notably, Base clears the first hurdle of maturity but faces a complex ceiling.
L2BEAT currently classifies Base as a Stage 1 rollup. This designation recognizes that users have a mechanism to exit the system even if the centralized operators cease to exist.
However, it also highlights the risks. Upgrades must be approved by multiple entities and there is no mandatory deadline for upgrades.
This means that users do not have a built-in “exit window” if they disagree with a code change. L2BEAT also signals the ability of the centralized sequencer to extract the MEV (Maximal Extractable Value) if it chooses to exploit its position.
This creates a specific dilemma for Coinbase, which is a publicly traded American company.
Still, Buterin criticized projects that stall in Stage 1 because “the regulatory needs of their clients require that they have ultimate control.”
Coinbase cannot easily transfer upgrade keys to an anonymous Decentralized Autonomous Organization (DAO) without potentially violating anti-money laundering and know-your-customer (KYC) compliance obligations.
If Base retains the Security Council veto for regulatory security, it risks falling into the category of projects that Buterin describes as “not scaling Ethereum” in the trustless sense.
Cheaper data threatens Base profits
The second compression force of the Base is technical. Ethereum is aggressively reducing the cost of its own block space.
In January, Ethereum activated the second Blob Parameters Only hard fork, the final stage of the Fusaka upgrade.
This update increases data capacity by increasing the maximum blob limit to 21 and the target to 14 per block, significantly reducing transaction costs for Layer 2 rollups such as Arbitrum and Optimism.
The abundance of this available data is a double-edged sword for Base.
On the one hand, cheaper blobs mean lower marginal costs per transaction, which is an advantage for consumer applications and high-frequency activities that thrive on the network.
On the other hand, it forces a change in the value proposition. If Ethereum’s core layer becomes cheap enough, the simple argument of “cheaper EVM execution” loses its power.
The central debate centers on rent extraction. Critics say rollups generate large fee streams while paying Ethereum relatively little for security.
As a reminder, Base published approximately 531.54 GiB of data on Ethereum over the last year. As the mainnet evolves, the political economy of sequencers, the entities that order transactions, becomes more important.
If the ecosystem moves toward shared sequencing or other dedicated mechanisms to reduce centralized control, the value of owning these command rights could fall. Base could win on total usage volume but lose on the “take rate” it charges per transaction.
Can Base win?
Coinbase seems keenly aware that the era of generic scaling is coming to an end.
Jesse Pollak, the lead developer of Base, publicly stated that it was great to see Ethereum expanding its Layer 1 and agreed that Layer 2s can’t just be “Ethereum but cheaper.”
Given this, he said the network is moving towards differentiation to survive the new roadmap by “creating the best products and opening new real-world use cases in trading, social, gaming, creators and predictions.”
Notably, Base has already achieved significant success in this niche, becoming a hotbed for viral consumer apps such as Friend.tech and Clanker.
At the same time, market analysts say that distribution is Base’s main gap.
The network pushes users to Coinbase surfaces, such as wallets and swaps, and supports the company’s B2B tools stack. This creates a funnel where revenue flows through multiple channels, not just sequencer fees.
Buterin’s message implicitly reduces the long-term value of “branding as scaling Ethereum”, but it does not reduce the value of sending a consumer up the on-ramp.
Overall, Base is positioned to remain a winner in terms of growth and monetization in the near term.
However, the long-term threat remains real.
If the market increasingly evaluates rollups based on their level of decentralization and credible exit guarantees, Base may need to accelerate toward tighter upgrade constraints, which could put Coinbase in a difficult position.
